SRC-JFA S.B. 33 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 33
By: Cain
Economic Development
4-28-97
As Filed


DIGEST 

For years, rental car companies have purchased liability insurance to
protect themselves and their customers for liability; and provided
customers optional additional coverage for an additional charge included
in the customer's rental agreement and paid to the insurance company.  The
Department of Insurance has initiated an investigation to determine rental
car company's authority to sell insurance. This bill would require a
rental car company or franchisee to obtain a limited license from the
commissioner of insurance.  Additionally, this bill would require a
licensed rental car company or franchisee to conduct a training program
for salaried employees to sell insurance.   

PURPOSE

As proposed, S.B. 33 sets forth procedures for issuing rental car
companies limited licenses as insurance agents. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 21.07, Insurance Code, by adding Section 21, as
follows: 

Sec. 21.  (a)  Authorizes the commissioner of insurance (commissioner) to
issue a license under this article to a rental care company that complies
with the provisions of this section and only for the limited purposes set
forth in this section.   

(b) Defines "limited license," "rental agreement," "rental car company,"
"renter," and "vehicle."   

(c)  Authorizes the commissioner to issue to a rental car company, or to a
franchise of a rental car company, that has complied with the requirements
of this section, a limited license authorizing the licensee, known as a
"limited licensee" for the purposes of this section, to act as agent, with
reference to the kinds of insurance specified in this section, or any
insurer authorized to write such kinds of insurance in this state. 

(d)  Provides that the prerequisites for issuance of a limited license
under this section are the filing of certain items with the commissioner.  

(e)  Authorizes the commissioner, in the event that any provision of this
section is violated by a limited licensee, to revoke or suspend a limited
license issued under this section in accordance with the provisions of
Article 21.01-2 of this code; or, after notice and hearing, to impose such
other penalties as the commissioner deems to be necessary or convenient to
carry out the purposes of this section. 

(f)  Authorizes the rental car company or franchise licensed pursuant to
Subsection (c) to act as agent for an authorized insurer only in
connection with the rental of vehicles and only with respect to certain
kinds of insurance.   

 (g)  Prohibits insurance from being issued under this section unless the
rental period of the rental agreement does not exceed 30 consecutive days;
at every rental care location where rental car agreements are executed,
brochures or other written materials are readily available to the
prospective renter that contain certain information; and evidence of
coverage is provided to every renter who elects to purchase such coverage. 

(h)  Requires any limited license issued under this section to also
authorize any salaried employee of the licensee who, pursuant to
Subsection (i), is trained to act individually on behalf, and under the
supervision, of the licensee with respect to the kinds of insurance
specified in this section. 

(i)  Requires each rental car company or franchise licensed pursuant to
this section to conduct a training program which shall be submitted to the
commissioner for approval prior to use and which shall meet certain
minimum standards.  

(j)  Requires each limited licensee acting pursuant to and under the
authority of this section to comply with all applicable provisions of this
article, except that notwithstanding any other provision of this article,
or any rule adopted by the commissioner, a limited licensee pursuant to
this section shall not be required to treat premiums collected from
renters purchasing such insurance when renting vehicles as funds received
in a fiduciary capacity, provided that certain conditions are established. 

(k)  Prohibits a limited licensee under this section from advertising,
representing, or otherwise holding itself or any of its employees out as
licensed insurance agents.   

SECTION 2. Effective date: September 1, 1997.

SECTION 3. Emergency clause.